What’s New
Residential directors, academic-affairs advisers, student-life staff members, and IT professionals are among college employees who could soon become eligible for overtime or get a significant pay raise under a final rule adopted on Tuesday by the U.S. Department of Labor.
Currently, under the Fair Labor Standards Act, eligible workers annually earning less than $35,568 must be paid overtime if they work more than 40 hours a week. Those who earn more are exempt from overtime. Under the new rule, that threshold would rise to $43,888 on July 1, 2024, and to $58,656 on January 1, 2025, for a total increase of 65 percent.
The new rule would also update the salary threshold every three years based on wage growth, starting on July 1, 2027.
The Details
College leaders will have just over two months to determine who on their staffs would be affected by the first new salary floor, and then to decide whether to have them track their hours so they can be paid overtime, or to bump up their pay so they are exempt. Colleges will then have a few more months to carry out the second increase in the overtime threshold. Professors are exempt from the overtime rule.
The American Council on Education’s president, Ted Mitchell, said in a written statement that his organization was disappointed that the new rule had failed to address the concerns of the higher-education sector, which employs close to four million people across the country.
“Ultimately, students will be harmed if institutions are forced to cut services, reduce financial aid, reduce staffing, and raise tuition to address the rapid growth in costs this rule would produce,” Mitchell said.
Andy Brantley, president and chief executive of the College and University Professional Association for Human Resources, said the new rule would have a significant impact at some colleges. “Mass reclassification could touch every area of the campus,” he said.
Brantley’s association had recommended that the salary threshold not be updated, that it not be automatically updated, and that the effective date be postponed. The group also recommended lowering the salary threshold from what was previously proposed and taking into consideration the room and board that are provided to some employees.
Brantley said colleges in the South would be most affected because that’s where salaries are lowest. Colleges with fewer resources are also expected to struggle more to observe the new rule, which could mean cutting costs in other areas.
The timing of the new rule will also present a challenge, Brantley said, because many budgets for the coming academic year have already been set and, in some cases, approved by boards and legislatures. “Decisions that have already been made in terms of budgets for next academic year could be significantly upended by the need to make necessary adjustments,” he said.
The Backdrop
Last September the Department of Labor issued a proposed rule that would have raised the overtime threshold to $55,000 a year. That figure could have risen as high as $60,000, based on increases in wages, so industry advocates were not surprised by the amounts announced this week. The proposal drew more than 33,000 comments.
In 2016, colleges prepared for a similar change in the overtime rule, only to see a federal judge block the shift days before the planned effective date.
The federal government last adjusted the threshold for overtime pay in 2020.
What to Watch For
Experts predict the new rule will be challenged in court, which could interrupt or even stop its rollout. But in the meantime, colleges will still need to prepare to follow the new rule starting on July 1.
